Top 5 Reasons that Small Businesses Fail
Did you know that statistically, 80% of businesses will fail within their first 5 years in business. And of the 20% that survive, 80% of those will fail during their next 5 years.
Here are the top 5 reasons that business fail….
- There is no clear and concise vision and mission which is communicated to and understood by all the stakeholders (owners, management, employees, customers and suppliers) in the company. This answers the question, “Why are we in business?”
- There is no culture which meets the needs of the owners, the employees, customers and suppliers of the company. This definition of culture answers the question, “How will we conduct ourselves as we do business?”
- There is no uniqueness that separates the company from its competition, thereby answering the question, “Why should our customers buy from us?”
- There is no system or ability to attract top performing people to accomplish the vision and mission. The really successful businesses do not depend on the charisma of any single individual, including that of the founder.
- And finally and the most common reason, there are no financial reserves such as ownership capital and outside lending resources, but most importantly, capital accumulated from a healthy stream of profits. The healthy stream of profits will attract ever increasing amounts of ownership capital and lending resources to help the company grow.
As a bonus I will add just one more.
There is no written plan in place to overcome any of the above failures. Not having a written plan has to be one of the biggest failures. Without a plan small businesses are just shooting from the hip and there are no benchmarks to determine what’s working and what is not. Unfortunately by the time they figure out what’s not working their time is up.
Until we meet up again, make it a profitable day…